The only exception to large increases in vegetable oil has been sunflower oil. This is almost uniquely caused by the war in Ukraine. The increase in consumption at 221.4 Mil Mt y-o-y is 5.3 Mil Mt while production is up 2.7 Mil Mt. Now we all know that US consumption is being doped by significant subsidies for Bio/Renewable Diesel with RINs, BTC, LCFS and in some cases even State subsidies. This will not stop in 2025 as IRA kicks in with the 45z rule that actually can pay as much as $1.75 per gallon ($600/mt depending on density and CI) directly to producers while the BTC is no longer in place putting much emphasis on production rather than blending. With respect to Indonesia, intentions to move to B50 grow louder to substitute diesel imports now but still no word on how they will cover the nearly $100/mt through levy of the differential between PME and diesel. If if weren't for Biofuels supporting vegetable oil prices, we would be facing a much starker picture as producers are keeping up with demand+
In northwest Europe, Rapeseed oil and soybean oil are at parity while RME/F0 still showing +56/mt. Gross bio transformation margin for RME are $98/mt while UCOME gross margin are much higher at $250/mt. Should be noted that UCO is also selling at same price as Soy/Rape oil ex-works. Traders will now be looking at winter biodiesel demand (RME) as window delivery in EU now approaching Oct1. No changes in production forecast in US as Aug soyoil expired and soyoil chart still looking as terrible as gasoil.
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